Brooklyn, LIC Continue to Attract Investment

The overall office availability rate in Brooklyn at the end of second quarter was 14.5%.

NEW YORK CITY—The Brooklyn and Long Island City commercial office markets are enjoying significant capital investment either through large lease transactions or new construction ventures aimed to attract companies in their respective high growth industries. For Brooklyn, the hot markets continue to be the technology and creative sectors that have helped drive asking rents in Kings County more than 14% higher from a year ago. Long Island City, on the other hand, is becoming a mecca for the fashion industry. Asking rents here have risen to new heights in the second quarter to $37.66-a-square-foot, as compared to $36.72-a-square-foot in the first quarter of this year, according to a report released by brokerage firm Newmark Grubb Knight Frank. The authors of the report, Newmark Grubb Knight Frank’s Jonathan Mazur, managing director, research, and Stephanie Jennings, tri-state director, research, predict average asking rents will go higher in both markets, while office availability rates will be flat in Brooklyn, but higher in Long Island City in the next 12 months. Brooklyn posted moderate leasing activity in the second quarter of this year, fueled by the continued influx of tech and creative companies into the market. The office availability rate for the borough fell slightly to 14.5% from 14.7% in the first quarter, but was up from the 13.1% rate posted at the end of the second quarter of last year. The largest lease deal in the second quarter was the FDNY’s headquarters renewal of its 339,993-square-foot lease at 9 Metrotech Center. Another recent deal of note was Brooklyn Brewery’s 75,000-square-foot lease at Building 77, which marks the brewer’s second location in Brooklyn. The tech and creative sectors are driving growth in Brooklyn, NGKF reports. In the second quarter, advertising agency Translation relocated from 145 W. 45 ^th St. in Manhattan to 34,673 square feet at 10 Jay St. in Brooklyn. Also, tech incubator 1776 opt established its New York City beachhead at the Brooklyn Navy Yard, taking nearly 33,000 square feet at Building 77. The big deal on the near-term horizon is the pending sale of the Jehovah’s Witnesses headquarters. NGKF reports the Jehovah’s Witnesses are in advanced negotiations to sell its world headquarters for approximately $700 million. The properties include 733,000 square feet at 25-30 Columbia Heights and 1.1million square feet of space at 85 Jay St. In Long Island City, the availability rate shot up from 10.5% in the second quarter of 2015 to 13.9% after the first six months of this year. The availability rate at the end of the first quarter of this year was 11.9%. The significant rise in the availability rate was due in large part to the 201,592-square-foot block of space that came on the market at 30-30 Northern Blvd. That space, along with some medium-sized availabilities, caused a negative absorption of 247,118 square feet in the second quarter of this year. The fashion industry continues to flock to this Queens location. Madewell signed the largest lease deal in the second quarter, totaling 59,680 square feet at the Factory building. The division of J. Crew relocated operations from the East Village at 770 Broadway. Several other fashion-related concerns inked leased deals in the second quarter, including fashion design and manufacturing company Eloquii, which leased almost 11,000 square feet at 37-18 Northern Blvd., and Gwynnie Bee, which expanded its lease at the Factory Building by 6,306 square feet. The women’s designer clothes online subscription service now occupies more than 19,000 square feet there. While there is 171,962 square feet of office construction currently underway in Long Island City, there is another 1.1 million square feet of space being repositioned for future office use. Tishman Speyer is planning a 600,000-square-foot project at 28-10 Northern Blvd, where WeWork will anchor (250,000 square feet). Other projects in the pipeline include Curbcut Urban Partners’ 125,000-square-foot project at 38-01 Queens Blvd., which is scheduled to break ground in January of next year, and Criterion’s 300,000-square-foot to 400,000-square-foot venture at 31-16 Northern Blvd., which is projected to be delivered sometime in 2018.